Dream homes on shaky ground

Barely three years ago, Anil Sharma — IITian turned developer and promoter of Amrapali Group — was ranked among the country’s biggest real estate tycoons, with 25 ongoing projects across the country. Sanjay Chandra, the promoter of Unitech, helmed the second largest developer after DLF, and Vidur Bhardwaj, promoter of 3C Developers, was considered the ‘face of green architecture’ in the country.

Not anymore. Once considered poster boys of India’s booming realty sector, these are now behind bars, facing serious criminal charges for duping home buyers.

Coming down heavily on the Amrapali group just last week, the Supreme Court ordered the confiscation of the promoters’ property and ordered the Debt Recovery Tribunal (DRT), Delhi, to auction these assets after finding them guilty of diverting funds of whopping 46,000-odd homebuyers. Just two days later, the SC ordered a forensic audit of Unitech Ltd and all its subsidiaries beginning from January 2006, and directed disbursal of Rs176 crore to buyers.

With hard-earned money of 80,000-odd home buyers in Delhi-NCR hanging in the wind due to a series of frauds, analysts claim that the recent crackdown by the courts against leading builders can set a strong precedent for erring developers guilty of turning dream homes into nightmares.

“Look at these cases. These are not fly-by-night developers but established names. The strong verdicts will set an example for them and other developers,” said advocate Brajesh Kumar, who appeared for some Unitech home buyers in court.

What is more important is that these cases also clearly show a lack of corporate governance and serious financial irregularities. In the Amrapali case, while it admitted to diverting Rs 2,990 crore from its homebuyers’ fund, it failed to outline the money trail of the diversion and pinpoint the people who were beneficiaries of the transactions.

“We are not getting any idea on how the money was transferred and whether it was approved by Board of Directors,” the SC had said. What was more interesting was that the forensic auditors appointed by the SC also expressed surprise over the submitted documents, adding that they were seeing such documents for the first time in their professional life and “not a single figure given matched bank statements”.

“As per the documents, the promoters did not invest a single rupee in the company -- the vast empire appeared to be created entirely out of homebuyers’ money,” the auditors pointed out.“This is the time for the sector to clean itself and set its record right. Consumers are much more aware today and they know their rights. The developers who will fail to comply will face similar fates,” said a senior auditor with Grant Thorton, the company tasked with the forensic audit of Unitech and its subsidiary.